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Jarama was only the first half of a pincer operation against Madrid. Bad weather delayed the Guadalaraja offensive until the Jarama half was already well underway, and by the time Guadalaraja was ready to go the Nationalist troops at Jarama were exhausted and incapable of recreating any momentum. But Franco had confidence in the "volunteers" from Fascist Italy and so Guadalaraja went ahead anyway. The advance was to be almost entirely an Italian affair.

General Roatta had 35,000 men in General Coppi's Black Flames, General Nuvolini's Black Arrows, General Rossi's Dio lo Vuole Division and General Bergonzoli's Littorio division. The last two had regular officers and conscripts, the other formations were made up of fascist militia. The Italian force was motorised, supported by four companies of tankettes, 160 field guns and four squadrons of Fiat fighters. Mussolini's appetite for glory pushed on the officers commanding these 'involuntary volunteers' whom he had managed to have combined into an independent Italian command.

On 8th February 1937, at first light, Coppi's motorised Black Flames division smashed straight through the Republican lines at Guadalaraja in the schwerpunkt manner. On their right Nationalist infantry also broke the Republican front but being on foot they were quickly left behind by the Italians. During that day fog and sleet reduced visibility to 100 yards, and the Italians allowed their attack to slow down while they widened the breach in the Republican front. This break in momentum was incompatible with blitzkrieg tactics and was all the more serious given the lack of coordination with the Jarama offensive. Reacting more rapidly than they had done at Jarama, General Miaja rushed in reinforcements and reorganised the Republican command structure. Enrique Listers division of communists and the Italian Garibaldi Battalion of XII International were the core of the Republican troops swiftly moved into position.

On 10th February the Black Flames and Black Arrows reached the walled town of Brihuega almost unopposed and occupied the town. Scouts from the Garibaldi Battalion came across an advance group of their fellow countrymen fighting for the Nationalists. The fascist patrol spoke to them, and told the Brigaders about the oncoming Littorio Division. Soon afterwards a fascist column led by tankettes came up the road from Brihuega assuming the road was open, and an Italian civil war began then around a nearby country house called the Ibarra Palace. Prepared for the propaganda opportunity the communists used loudspeakers to urge the fascist militia to join their brother workers.

The next day the Black Arrows pushed Listers troops down the road, but the advance was halted just short of Torija. On the 12th the Republicans counterattacked. 100 fighters harried the fascists while they were pushed back by counterattacks by Pavlov's T-26s. The Fascist fighters were unable to take off from waterlogged runways, and the Italians withdrew to Brihuega. General Roatta then proceeded to shuffle around his motorised divisions into a new formation, a maneuver which led to many vehicles become stuck in the mud, where they became easy targets for strafing Republican fighters.

The next day, 13th February, the Republicans prepared for a major counteroffensive while diplomats protested to the League of Nations with proof from prisoners that they were fighting Italian units. On the 18th Mera's division of socialists occupied the heights above Brihuega, heavy sleet shielding them from the enemy's view. In the afternoon, the weather cleared and the attack proper commenced. Lister and the T-26s advanced to the town where they were opposed by the Fascist Littorio Division. Mera's division by now had almost managed to surround the fascists, and total disaster was only averted by the Littorio Divisions well conducted retreat up the main road, by the fall of darkness, and the Italian's wealth of transport. Even so, the rout of the Italian force was undeniable, and the camapaign cost them 5000 men and a considerable quantity of material.

The Battle of Brihuega was one of the few clear Republican victories of the war, and became a propaganda trophy. The communists added a few embellishments and made sure the entire world knew about what had happened to the Italians at Brihuega. Franco's officers on the other hand refused to see it as a Nationalist defeat given so few Spaniards were involved. They were scathing about the performance of their allies, and Nationalist soldiers composed a song ending 'the retreat was a dreadful thing, one Italian even arrived in Badajoz'. But while excellent for Republican morale, the battle was not the turning point that communists tried to portray. The only certain consequence was that Franco finally abandoned his goal of entering Madrid to quickly end the war, and was persuaded by his German advisers to reduce vulnerable Republican territories first.